SAN FRANCISCO (TheStreet) -- Embattled car rental company Hertz (HTZ) turned to the airline industry for help Thursday, naming John P. Tague, the former president of United Airlines, as its chief executive, effective Friday.
Tague was at United for eight years, rising through the ranks to become president and chief operating officer, prior to parent UAL's merger with Continental to become United Continental Holdings (UAL) . More recently, Tague was CEO of Cardinal Logistics Holdings, a transportation provider.
Shares of Hertz fell slightly by 0.22% to $22.70 in after-hours trading and are off 21% for the year to date. The company has been struggling to win shareholder support and its stock has fallen approximately 28% from its 52-week high hit over the summer.
Hertz has been looking to replace its CEO since September, when Mark Frissora announced plans to step down for personal reasons. His resignation followed Hertz’s announcement in June it would restate earnings going back as far as 2011. The company also noted that the Sec urities and Exchange Commission had opened an investigation into the company’s accounting practices.
Hertz activist shareholder Carl Icahn played a role in Tague's appointment. Two of the five independent directors on the CEO search committee are Icahn appointees to the Hertz board, per the deal Icahn struck with the company in September as part of a settlement. But whether Tague's appointment will pass muster with other activist shareholders such as Jana Partners, which recently pushed for Hertz to name Scott Thompson, former Dollar Thrifty Automotive Group CEO, has yet to be seen.Linda Fayne Levinson, Hertz's non-executive chairwoman, called Tague a "leader whose record shows a relentless focus on execution and high performance, having driven the successful turnaround of other large, complex consumer facing companies such as United Airlines."
Icahn also weighed in, saying that "after listening to John's ideas concerning Hertz and evaluating what he has accomplished at United, I believe he ranks at or near the top of the group" of CEO candidates he helped pick at other companies.
In particular Icahn said Glenn Tilton, the former chairman and CEO of United Airlines, told him that had the UAL/Continental merger not taken place, Tague "would have been Glenn's recommendation to be the next CEO of United once Glenn retired."
At the time of publication, the author held no positions in any of the stocks mentioned, although positions may change at any time.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
TheStreet Ratings team rates HERTZ GLOBAL HOLDINGS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate HERTZ GLOBAL HOLDINGS INC (HTZ) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
You can view the full analysis from the report here: HTZ Ratings Report